Update as of Friday, Feb 14, 2020.
This is not investment advice. Please read the disclaimer.
Compared to my last Sum-Of-The-Parts Valuation of Softbank Group (9984 JP) many of the “moving parts” moved quite a bit. Most noteworthy developments were:
- Elliot, an activist hedge fund bought a considerable stake of Softbank Group (c. 3 bn USD) and could (i) help narrowing the discount to SBGs Net Asset Value or NAV and (ii) improve management quality / governance supporting better investment processes, i.e. to prevent things like the WeWork debacle in the future.
- The TMUS-Sprint merger in the US is now much more likely to go ahead pushing Sprints Stock price upwards, even if there is a realistic chance that the deal terms are changed to a slight disadvantage to Sprints and SBGs side (the reasoning is based on the two shares performance since the original deal: TMUS performed very good, Sprint was quite down).
Based on updated numbers for standalone Net Debt as well as market prices of SBG and Sprint and other assets as of Feb 14th, my SOTP valuation results in the following (conservative scenario: 30% tax discount applied to Alibaba, YahooJapan Stakes, SVF valued at 0x):
NAV is at 185 bn USD compared to a current Market Cap of 105 bn USD only, indicating a discount from NAV of 43%. For the time being, this discount is still big enough for me to hold my Shares in Softbank Group, considering that Elliot increased the chances of shrinking the discount to NAV furhter in the future, substantially.